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INDIA
ACME Cold Retreads to Boost Sales Staff
Subhash Rajan of ACME Cold Retreads
Mumbai based ACME Cold Retreads is planning to add more people to its sales team in order to improve volumes. The retread plant is on a prime property in Mumbai and ACME plans to open a tyre retail outlet in the near future in addition to its retreading facility. “We are not considering shifting the retread plant
to a new location as it is at a good place. Our idea is to start a tyre shop to support the retread business,” said Subhash Rajan of ACME Cold Retreads.
The volumes at the retread plant are currently somewhat below normal levels at around 300 tyres each month, and the immediate hope is
to hike volumes to 400 units. However, with dwindling retread volumes, Rajan says he is shifting focus to the new tyre business, and the company currently sells 12 brands from its Andheri West outlet. ACME has a flourishing new tyre business, selling mainly Bridgestone brand car and truck tyres.
ACME, however, is keen on reviving the
retreading business also, which is currently looked after by Rajan’s father. The Indag plant and tread rubber franchisee retread business survives mainly on credit. “We are small player and at the best of times we have retreaded in between 500- 600 tyres each month but over a period of time the retreading
business has become highly competitive and margins have almost vanished. Customers increasingly prefer retreaders offering long credit, which is harming the growth of retreading,” explained Rajan.
The company plans to hire more people as sales staff. Currently, the business is a very lean operation with around 5 workers operating the retread operation. “We need more people in sales to bring orders from the market. Times have changed. Clients used to drop tyres with us but now we have to nurture clients and establish long-term relationships to get orders,” he said.
ACME intends to hike volumes from 300 to 400 tyres per month in the immediate future on the strength of a couple of new truck/bus tyre clients. Currently, the majority of the company’s clients are oil tankers and dumpers from the cement industry. “We need to have a minimum volume of 500-600 tyres each month, which we hope to achieve by the end of 2016,” Rajan said. The plant started in 1992 and covers a radius of 55 km in the district of Raigad.
Khopoli Move Helps Gardex Avoid Mumbai Competition
Two years ago MRF franchisee Gardex Retreads Works moved out of its retread plant around 40 km from Mumbai and relocated to Khopoli in the district of Raigad on the Mumbai-Pune expressway. According to Director Jinesh Purshothaman, the plant, which started in 1991, was relocated due
largely on credit.”
The other major factor, according to Purshothaman, was the effect of business lost to small retreaders who are evading taxes and charging much lower fees due to low operational costs.
“We used to retread more than 1,500 tyres a month, but low cost
retreaders,” he added.
It has been observed that retreaders have been gradually shifting their plants from Maharashtra to Belgaum in Karnataka on the border of Maharashtra due to low taxation and VAT, which is as low as 2 per cent compared to 12.5 per cent in Mumbai. Although Mumbai is a big market, it is an expensive environment in which to operate, and in the absence of any support from the state government, retreaders are moving out of the city. Currently, Gardex retreads around 1,000 tyres per month and is operating at 40 per cent of capacity. Installed capacity is around 2,500 tyres per month.
The retreader believes that running
the plant to capacity is very much possible as the market is there. “Price is a major issue, though,” says Purshothaman. “Low cost retreaders are operating at ridiculous price levels, and we cannot match them. They are responsible for killing the market for organised players like us.” Gardex retreads OTR tyres by the hot process and truck/bus tyres by both hot and cold processes. Radials are precured electrically, while bias tyres are cured in steam chambers. “Public transport company contracts are highly price sensitive, therefore, their tyres are retreaded by the traditional hot process,” said Purshothaman. The plant has one 5 tyre autoclave and 6 two tyre bonders.
Jinesh Purshothaman, Director, Gardex Retreads Works
to cost considerations. “Lots of companies are moving out of Mumbai due to the high taxes levied on finished products,” said Purshothaman.”We found it was not possible to sustain our business in such a highly competitive market, especially when business is run
plants operating in the market made us uncompetitive pricewise. This, coupled with the surging overheads prevalent in a city like Mumbai, made us prefer a locational shift,” he said. “Organised retreaders have to pay high VAT of 12.5 per cent compared to nothing for small
Despite the slowdown in the Indian retreading market over the last couple of years, Mumbai based retreader Tyresoles has continued to buck the trend by recording growth of 20 per cent in terms of volume. The retread major is targeting growth of 30 per cent in fiscal 2015- 16, which culminates in March. The retread company continues to grow
on the strength of strategic alliances and JVs it has formed in the domestic retread industry in various parts of the country. The company has entered the western Indian state of Gujarat recently through a joint venture with a local partner in Ahmedabad. “We have partnered with a local retreader, upgraded its Ahmedabad based production
Tyresoles Target 30% Growth Despite Slowdown
26 Retreading Business